This Morning: As the BlackBerry Turns, Cheers for Mellanox, ARM

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of BlackBerry (BBRY) are down 15 cents, or 1.9%, at $7.81, despite a slight bit of positive news this morning: a report by Tara Perkins, Sean Silcoff and Jacquie McNish of The Globe and Mail stating Fairfax Financial Holding, which is aiming to take BlackBerry private, has submitted a draft of its takeover agreement to BlackBerry, citing multiple unnamed sources.

The authors write that an expression of interest by Cerberus Capital Management LP, first reported by The Wall Street Journal yesterday, is separate from Fairfax’s effort and potentially competitive.

However, Bernstein Research‘s Pierre Ferragu this morning reversed an upgrade of the stock he made on on Monday, cutting it back down to Underperform, after reviewing the 6-K quarterly filing made with the SEC this week and concluding that the company could burn $2 billion in cash in the next six quarters, far worse than he had anticipated.

“This makes any floor valuation almost irrelevant and implies that the Fairfax-led initiative has – if our analysis is right, almost no chance to secure support and financing,” he writes. “We see a remotely possible “strategic acquisition” as the only upside risk left on the stock and barely any valuation floor.”

Shares of connectivity vendor Mellanox Technologies (MLNX) are up $1.70, or 4%, at $41.58, after Craig Hallum‘s Rajesh Ghai this morning raised his rating on the shares to Buy from Hold, and raised his price target to $54 from $52, writing that “we believe the decline following the 2QFY13 report puts the stock at a level that bakes in very low expectations for the remainder of FY13.”

“Looking ahead, we expect MLNX to launch 100Gb EDR InfiniBand ahead of INTC’s launch and maintain its competitive advantage over INTC given the maturity of MLNX’s software stack and proven installed base, not unlike what MLNX was able to do prior to INTC’s acquisition of QLGC’s assets in this market.”

Following word yesterday that some Microsoft (MSFT) investors wanted Bill Gates to give up his chairman spot, The Financial Times‘s Richard Waters and Stephen Foleythis morning write that some investors are concerned that Gates’s “continuing strong influence” might warp the search for a replacement for Steve Ballmer as CEO.

Quoting one investor, unnamed, they write, ““In a case where the founders have had their turn, as it were, and where one was arguably pushed out in disgrace over performance, it is important that the process be robust and the appointee is focused on the future and not the emotional or financial needs of the people who were there in the beginning.”

Microsoft shares are up a penny at $33.93.

Shares of ARM Holdings (ARMH) are down 93 cents, or 2%, at $47.95, after The Benchmark Company’s Gary Mobley reiterated a Buy rating on the shares, and raised his price target to $54 from $48, writing he expects “relatively strong results out of ARM during 2H FY13, which is supported by a strong semiconductor market” and that customers are making longer and longer commitments to licensing ARM’s technology after deciding the “ARM ecosystem will further penetrate markets outside of mobile.”

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There are 9 comments

OCTOBER 3, 2013 11:28 A.M.

Anonymous wrote:

"Macquie McNish" do you have a lisp? Or are you just calling a thpade a thpade. Whatever that means?

OCTOBER 3, 2013 11:38 A.M.

Anonymous wrote:

Blackberry won't last six more quarters... Seriously. It's save personal reputation time. From Watsa, Stymiest, Martin, Heins, Lazaridis etc and anybody else associated like the board; the shame and indignity will be too much like an albatross around the neck. What good is money if after the parachute works everyone looks at you like a vain bloodsucking loser. Far that'll get you... Integrity is everything man.

OCTOBER 3, 2013 12:39 P.M.

Anonymous wrote:

One of today's Globe articles said the only silver lining left is Blackberry is only committed to pay suppliers $2.9 bin unlike last quarter's $5.2 bin. And a spokesperson for Mike Lazaridis said the talented engineer will not be talking to the media until a deal is done.

Does anybody know if the talented engineer Michael Lazaridis has anyother talents besides engineering? Is he a good dancer? Can he do hair? Maybe play accordion? Nose flute?

OCTOBER 3, 2013 1:05 P.M.

Anonymous wrote:

The globe authors continue to cheerlead for their canadian brothers and are still ignoring the underlying flaws in the company's fundamentals. My issue is that in promoting their cover story this past weekend, they have raised nationalism and support of their neighbor above asking the hard questions to management regarding board oversight, aircraft leases and golden parachutes to Thorsten.

By the way, a Draft isn't newsworthy. They'd already submitted a Letter of Intent, and all a draft (to me at least) means is that theyre still thinking about it. It also doesnt imply that WatsaMattaWithOtherPeoplesMoney has received additional backing.

OCTOBER 3, 2013 1:15 P.M.

Anonymous wrote:

Just announced in the G&M that Rogers will not be selling the new Blackberry Z30!

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.